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Gonzalez v. EJ Mortgage

May 17, 2010


The opinion of the court was delivered by: Honorable Barry Ted Moskowitz United States District Judge


Defendants Chase Home Finance, LLC ("Chase"), Citibank, N.A., and EMC Mortgage Corporation (collectively, "Moving Defendants") have filed a Motion to Dismiss the First Amended Complaint [Doc. 8]. For the following reasons, the Court GRANTS the motion.


In January 2007, Plaintiff refinanced his home at 5424 Stirrup Way, Oceanside, CA. He borrowed $456,000 and got a $57,000 home equity line of credit, both secured by deeds of trust. Defendant EJ Mortgage was the broker on the deal, and Defendant Southstar Funding was the lender (neither Defendant has appeared). Defendant Quality Loan Service Corporation is now the trustee under the deed of trust.*fn2 And Defendant Chase now services the loan. Defendant Citibank holds all beneficial interests in the deeds of trust.

Plaintiff claims that Defendants violated the law in several ways when they issued him his loans. He alleges eight causes of action: (1) intentional misrepresentation, (2) fraudulent concealment, (3) breach of fiduciary duty, (4) constructive fraud, (5) quiet title, (6) violation of the Real Estate Settlement Procedures Act ("RESPA"), (7) accounting under RESPA, and (8) violation of the Truth in Lending Act ("TILA"). The Court discusses the factual allegations relevant to each claim below.


Under Federal Rule of Civil Procedure 8(a)(2), the plaintiff is required only to set forth a "short and plain statement of the claim showing that the pleader is entitled to relief," and "give the defendant fair notice of what the . . . claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). When reviewing a motion to dismiss, the allegations of material fact in plaintiff's complaint are taken as true and construed in the light most favorable to the plaintiff. See Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). But only factual allegations must be accepted as true-not legal conclusions. Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. Although detailed factual allegations are not required, the factual allegations "must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555. Furthermore, "only a complaint that states a plausible claim for relief survives a motion to dismiss." Iqbal, 129 S.Ct. at 1949.

In ruling on a motion to dismiss, a court may take judicial notice of matters of public record that are not subject to reasonable dispute. Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001).


A. Intentional Misrepresentation Claim

The elements of an intentional misrepresentation claim are (1) a misrepresentation, (2) knowledge of its falsity, (3) intent to induce reliance, (4) justifiable reliance, and (5) resulting damage. Anderson v. Deloitte & Touche, 56 Cal. App. 4th 1468, 1474 (1997). Intentional misrepresentation must be pled with particularity, and the plaintiff must allege "how, when, where, to whom and by what means the representations were tendered." Robinson Helicopter Co., Inc. v. Dana Corp., 34 Cal. 4th 979, 993 (2004) (citing Lazar v. Superior Court, 12 Cal. 4th 631, 645 (1996)); see also Moore v. Brewster, 96 F.3d 1240, 1245 (9th Cir. 1996).

Here, Plaintiff failed to plead the elements of intentional misrepresentation with particularity. Plaintiff alleges that Southstar and EJ Mortgage misrepresented his income on the loan application. But Plaintiff cannot plead reasonable reliance on income figures written by Defendants because he knew or should have known his actual income. Moreover, Plaintiff signed the adjustable rate rider, which stated the monthly payments on the loan. Whatever representations Southstar and EJ Mortgage made about his income on the loan application, Plaintiff knew his income and he signed documents showing that he would have to pay $1,947.50 in interest in each month. He cannot now claim to have relied on misrepresentations which he had the opportunity to review. See Brown v. Wells Fargo Bank, N.A., 168 Cal. App. 4th 938, 958--59 (2008) (no reasonable reliance where aggrieved party had reasonable opportunity to discover terms of contract).

Moreover, Plaintiff does not allege that any of the Moving Defendants made misrepresentations to him. Plaintiff provides no legal support for imputing to them the allegedly tortious conduct of Southstar and EJ Mortgage.

For these reasons, the Court DISMISSES without prejudice Plaintiffs' claim for intentional misrepresentation as against all Defendants.

B. Fraudulent Concealment Claim

The elements of fraudulent concealment are "(1) the defendant must have concealed or suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff must have been unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage." Marketing West, Inc. v. Sanyo ...

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